How to Open a Demat Account Without PAN Card?

A Demat account is similar to a bank account when it comes to functionality. It holds all of your securities in electronic format. It tracks and logs your investment activities in the market.

After the dematerialisation of physical securities, investors must have a Demat account to trade.

Depository Participants (DP) can ask for various documents like a PAN card, an Aadhaar Card, digital signatures, etc., to verify your identity to open a Demat account.

However, you might wonder if you can open a Demat account without a PAN card. In this blog, let us discuss the role of a PAN card in opening a Demat account.

Can We Open a Demat Account Without a PAN Card?

If you are wondering how to make a Demat account without a PAN card, you need to be aware of some norms. In India, to trade through a Demat account, you must produce your PAN card as per the guidelines of the Securities and Exchange Board of India (SEBI). As per SEBI rules, your PAN card is considered an Official Valid Document (OVD) for investments.

As an individual investor, you must submit a self-attested copy of the PAN card for a Demat account. Furthermore, when opening a Demat account with joint holders, both account holders must provide their PAN cards.

What is the Process to Create a Demat Account Online?

Before investing, you must choose your preferred DP and open a Demat account. Most DPs now have the facility to create an account online. With PL Capital Group – Prabhudas Lilladher, you can create a Demat account online with these simple steps:

• Step 1: Open the app store on your Android or iOS device and search for the PL Capital app.
• Step 2: Download, install and open the app to provide key information, such as your name as per the PAN card and the mobile number you want to register and submit.
• Step 3: You will receive an OTP on the number. Provide the OTP, fill out the KYC details and your Demat account will be ready.

Key Documents Needed to Open an Online Demat Account

Now that you know you cannot open a Demat account without a PAN card, you should have an idea of the additional documents you might need for the account. Take a look at the section below for the documents you need to keep handy:

1. Identity Proof

To open a Demat account, you must provide a valid ID proof for verification. While opening the account, provide your PAN card with the correct details and an updated photograph. Depending on DPs, you can provide other documents like a driving license, voter ID, etc.

2. Address Proof

DPs also ask for proof of address issued by a recognised institution. It is best to provide an Aadhaar Card as an address proof and ensure there are no mistakes in the card details for a seamless account creation. DPs might consider utility bills, voter ID cards, etc., as proof of address.

3. Digital Signature

When applying for a Demat account, a digital signature is important. It ensures that your identity and submitted documents are authentic to streamline the verification process. Ensure that there is no mistake in your digital signature to avert delays in account opening.

Why PAN is a Must to Open a Demat Account in India?

Due to the SEBI guidelines, you cannot open a Demat account without a PAN card, and as per recent revisions, you cannot invest in securities. Both Indians and Non-Resident Indians need a PAN as a prerequisite to trade in securities.

However, there are relaxations for people residing in specific regions in India. Citizens belonging to the Scheduled Tribe (ST) and living in states like Manipur, Arunachal Pradesh, Mizoram, Nagaland, Assam, and Sikkim can have a Demat account without a PAN.

If you are one such investor, you can invest in securities worth up to INR 50,000. However, you need to produce a valid document as proof of being in the ST category.

Conclusion

If you are looking for a way to open a Demat account without a PAN card, as per SEBI, it is not possible. Your PAN acts as a vital document for ID proof and also acts as an OVD. However, if you are from the North-East Indian states and belong to the ST category, you can invest up to a certain amount.

FAQs

1. Is there any exception for minors to open a Demat account without a PAN card?

No, there is no exception for minors to open a Demat account without a PAN. While opening a Demat account, minors must produce their PAN card and the legal guardian’s PAN card. Until a minor turns 18, the guardian will control the account.

2. What is the reason for making the PAN card a mandatory document for Demat?

A PAN card not only acts as ID proof but also has many other usages, making it essential for a Demat account. It helps with tax and regulatory compliance, prevents fraud, etc. Overall, a PAN card helps maintain transparency, market integrity and prevents illegal activities in the market.

3. What happens if I apply for a Demat account without a PAN card?

The SEBI guideline suggests that to open a Demat account and trade in securities, you must provide your PAN card. However, if you are a resident of a specific Northeastern state and the ST category, you can trade in securities worth up to INR 50,000.